Business in Cyprus - Real Estate Cyprus

Doing business in Cyprus

The synergy created by Cyprus' tax system, combined with a stable and flexible common law system, has created the most favourable tax regime in the European Union, which is widely used for tax planning and asset protection.

Cyprus has an impressive and growing network of double taxation treaties (more than 60) and, as a member of the European Union, can benefit from a large network of EU directives eliminating withholding taxes.

Companies registered in Cyprus can enjoy the following benefits:

No withholding tax on dividends, interest and royalties.
No capital gains tax on the sale of securities.
12.5% corporate income tax which is one of the lowest in Europe.
The intellectual property regime allows for an effective corporate tax rate of 2.5%.

When thinking about Cyprus, it is also important to consider the high potential of the booming economy, the excellent infrastructure, the high quality of professional services and the fact that it is considered one of the safest places to locate your business and family.

Holding companies

The holding system in Cyprus is one of the most attractive in the world.

The sale of securities is not subject to Corporate Tax or Capital Gains Tax. This means that a Cyprus company can sell shares and trade in various financial instruments without any taxes.

Trading Companies

The profits of commercial companies are taxed at a low fixed rate of 12.5%.

A Cyprus company is not required to register for VAT & VIES unless it generates a certain type of income and this income does not exceed the threshold of €15,600 per annum for activities subject to VAT.

Characteristics of a Cyprus trading company

if trade takes place with countries outside the EU, VAT does not apply.
If the trade is with EU countries, the company must register for VAT and VIES. However, sales invoices issued by a Cyprus company may include 0% VAT when the trade/service is carried out within EU VAT taxable companies.

If trading with any entity in Cyprus, the company must charge local VAT of 19%.

Intellectual property regime

Cyprus currently has one of the most favourable intellectual property regimes in the world, levying only 2.5% of tax.

The main types of assets included in intellectual property are:

Patents
Copyright
Trade marks

Characteristics of intellectual property rights in Cyprus:

Profits generated from the sale of intellectual property owned by Cyprus-based companies are subject to an exemption of 80% of that profit.
The 80% exemption also applies to royalty income derived from intellectual property.
Capital expenditure related to the purchase or development of intellectual property can be adequately deducted over 5 years, so the annual depreciation allowance is 20%, starting from the year of purchase or development of the intellectual property. These expenses can also be deducted from taxable income, further reducing the taxation of profits. To take advantage of the above benefits, the Nexus approach must be applied.

Partnership Limited By Shares"

The Cyprus Partnership Limited By Shares is a hybrid entity that can issue shares and is transparent for tax purposes in Cyprus. When combined with foreign equity entities (e.g. Companies), it is possible to create structures that benefit from zero taxation in Cyprus and no withholding taxes on dividends paid to the company's shareholders.

"Trusty"

The Cyprus International Trust allows non-residents to benefit from a high level of asset protection, confidentiality and non-taxation. Income and capital gains generated outside Cyprus, dividends, interest and and other income received by the Trust in Cyprus from Cypriot or foreign companies are tax free. Cyprus Trusts are also not subject to Cyprus estate tax.